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Down payment programs 101: What buyers need to know before they start shopping

By Melinda Harris

January 2026

If you're aiming to buy a new home, now is the time to map out your budget, your timeline, and the support that might be available to you. For a lot of buyers, the biggest sticking point isn’t the monthly mortgage payment, it’s the upfront cash. Saving for a down payment while keeping up with rent, groceries, childcare, student loans, and everything else life brings can feel like a mountain to climb.

Here’s the encouraging part: Even if the path feels challenging, you have more resources than ever to help you get there. A wide range of homeownership programs now exist across the country, and down payment programs are just one option. With 2,600+ programs nationwide and at least 1 active program in every U.S. county, buyers in nearly every situation can get assistance with a down payment, closing costs, monthly affordability, or even tax credits. The average benefit for each homebuyer from down payment programs alone is around $18,000, which can mean the difference between waiting on the sidelines and getting the keys.

Considering buying a home this year and exploring your mortgage options? Below are the 4 questions homebuyers ask most often about homeownership programs, answered with today’s market in mind.

How do down payment programs work?

Despite lingering myths, down payment programs are not only for very-low-income borrowers or first-time homebuyers. Many serve moderate-income households, and some are designed for specific groups, such as teachers, health workers, first responders, veterans, and other community-impact professionals.

Down payment programs fall under the larger umbrella of homeownership support and come from many types of providers, including state and local housing agencies, nonprofits, employer-sponsored programs, and community organizations.

Program requirements – such as income caps, purchase price limits, and property guidelines – vary by location and provider. If a homebuyer meets those requirements and their application is approved, they receive a commitment of funds to help with the down payment, closing costs, or both. These funds are delivered directly to the lender or closing agent and applied at closing, reducing the cash the buyer must bring to the table.

 

What other types of homeownership programs are offered?

Down Payment Resource® has a free search tool that helps homebuyers find the full range of homeownership programs available in their area. Today, there are more than 2,600 programs across the country, which fall into 3 primary categories:

1. Down payment programs and grants
These remain the most common type of program and help buyers overcome the upfront-cost barrier. Programs may be offered by cities, counties, states, nonprofits, or other local partners, and many are paired with first mortgages to create a full affordability package.

2. Affordable first mortgages
State housing finance agencies (HFAs) and some local entities offer first mortgages with below-market rates, reduced fees, or additional incentives. These loans are designed to lower monthly payments and improve long-term affordability. Many are available statewide, and some may include extra benefits in targeted areas focused on revitalization or low- to moderate-income (LMI) homeownership.

3. Mortgage Credit Certificates (MCCs)
MCCs are annual federal tax credits for qualified first-time buyers and, in some cases, repeat buyers in certain areas. They reduce tax liability dollar for dollar, effectively boosting buyers’ monthly cash flow. As affordability challenges grow, more states and municipalities are revisiting or expanding MCC offerings.

 

A note about forgivable down payment assistance

Whatever type of program a buyer uses, it’s important to know whether funds must be repaid. Some programs may require repayment only under certain circumstances. Common repayment triggers include moving out, selling the home, or refinancing before the forgiveness period ends. Understanding these details helps buyers choose the program that aligns best with their long-term plans.

How long does it take to get down payment assistance?

Timelines vary by program and lender. In most cases, however, qualifying for the down payment program runs alongside first mortgage underwriting.

If you’re planning a 2026 purchase, the best move is to start your down payment program search early and complete any upfront requirements (like a homebuyer education course) before you’re under contract. That keeps your closing timeline smooth and predictable.

Can you get down payment assistance with a conventional loan?

Yes, as long as the down payment program allows conventional financing. Program rules vary on maximum benefit amounts, eligible loan types (FHA, VA, USDA, conventional), and whether layering is permitted.

If a buyer qualifies for a conventional first mortgage but needs more than the down payment program can provide, they must cover the remaining gap with their own cash. Some programs allow layering or stacking as mentioned above, meaning more than 1 program can be used on the same loan, which can significantly expand total support.

Conventional buyers also don’t need 20% down. With private mortgage insurance, many can put down 3% to 5%, and then use a down payment program to cover all or part of that down payment, sometimes with leftover funds for closing costs. 

The bottom line

In today’s market, saving enough cash is one of the hardest parts of buying a home, but more help is available than ever before. With 2,600+ homeownership programs nationwide and an average benefit near $18,000, most buyers have plenty of options worth exploring.

Aspiring homebuyers should search for local programs early, then connect with a lender experienced in these programs. By understanding the full landscape of homeownership program offerings, buyers can build a stronger mortgage plan and reach the closing table with confidence.

Down Payment Resource® is a registered trademark of Workforce Resource.

The opinions and insights expressed in this blog are solely those of its author, Melinda Harris, and do not necessarily represent the views of either Mortgage Guaranty Insurance Corporation or any of its parent, affiliates, or subsidiaries (collectively, “MGIC”). Neither MGIC nor any of its officers, directors, employees or agents makes any representations or warranties of any kind regarding the soundness, reliability, accuracy or completeness of any opinion, insight, recommendation, data, or other information contained in this blog, or its suitability for any intended purpose.

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Melinda

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Melinda is the Director of Marketing and Communications at Down Payment Resource, where she is responsible for the marketing, communications, and public relations goals for the company. With more than 20 years of experience in the real estate and finance industries, Melinda is passionate about homeownership.
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